Pakistan’s economy has long been a battleground of political rhetoric, with each government blaming its predecessor for the country’s financial woes. The Pakistan Tekhrek-e-Insaf (PTI’s) recent brief, “The State of the Economy,” paints a grim picture, accusing the Pakistan Democratic Movement (PDM) government of mismanagement and regressive policies. But is this narrative entirely accurate?

The political rhetoric and front-page headlines mask a tale of perseverance, change, and success. Those who are critical only see the short-term benefits. On the other hand, fundamental changes implemented by the PDM administration should finally end Pakistan's economic uncertainties.

Achieving Stable Macroeconomic Conditions: Beyond the IMF Assistance Programs

The PTI claims that the PDM administration's macroeconomic stability is not new, referring to 14 IMF programs since 1988 and short-term stabilization. However, it does not examine the structural changes resulting from the current IMF program. The PDM administration has focused on the energy sector's circular debt, aiming for cost recovery and pricing reduction. Digitalization has improved revenue collection efficiency and expanded the tax base. The administration has also right-sized the central government, reduced spending, and delegated authority to provinces, which are not stabilizing measures but rather components of ongoing growth.

The PTI accuses the PDM government of causing poverty by reducing taxation and subsidies. Despite the need for subsidy reforms due to Pakistan's fiscal crisis, the PDM government has balanced austerity with social protection by increasing Benazir Income Support Program allocations by 25% in fiscal year 2024. The government has also implemented pension reforms, consolidating civil and military pensions to save Rs 170 billion annually and projected to save Rs 1.7 trillion over 10 years.

 Pakistan's economy is facing economic failure due to a 1.03% drop in industry and a 3.8% decline in large-scale manufacturing. Global headwinds, including record commodity prices, supply-chain disruptions, and tightening financial conditions, have disproportionately affected emerging economies like Pakistan. The setting government is addressing these challenges through energy price adjustments, foreign partnerships in agriculture, mining, and IT, and energy reforms expected to save Rs 137 billion annually. Industrial resuscitation is being set on its footing, and taxation is being balanced amid criticism.

PDM Government’s Economic Reforms and Growth Strategy amid PTI Criticism:

The PTI accuses the PDM government of subjecting the poor to indirect taxation and exorbitant electricity rates. However, the PDM government has introduced progressive measures such as higher income tax rates and a windfall tax on banking to repay debt and finance growth. Non-interest spending has risen by 32%, with high-priority investments in climate resilience, health, and education. Electricity tariffs are high but based on cost-recovery principles to avoid power sector collapse. Critics focus on short-term suffering rather than long-term gain.

The PTI claims Rs 1.37 trillion was wasted on salaries, pensions, and "special initiatives," which are intended to retain talent and avoid brain drain. The PTI's spending on populist projects like the Naya Pakistan Housing Scheme lacks transparency. The PDM government's expenditures are aimed at addressing systemic issues rather than short-term political gains. Inflation is a shared challenge, not a partisan failure.

The PTI claims that declining inflation is due to recessionary conditions rather than policy success. However, core inflation has decreased to 9% in January 2025 due to tight monetary policy, improved supply chains, and rupee stability. State bank autonomy and fiscal deficit surplus have also contributed to stability. While demand compression played a role, these gains acknowledged the policy wins of the PDM government. Critics dismiss these gains as partisan narratives.

The PTI claims that the Pakistani government is avoiding structural reforms, threatening further recession. However, several reforms have been enacted, including tariff rationalization and the Pakistan Sovereign Wealth Fund Act to privatize state-owned enterprises. Debt management has been strengthened through rollovers from bilateral partners and approval for the IMF's Climate Resilience Fund. Privatization drives, starting with PIA, have attracted international investor interest, demonstrating faith in Pakistan's economy's direction.

The PDM government is implementing a coordinated economic policy to address system issues and promote stable growth. This includes rightsizing the federal government, pension reform, privatization, and energy and civil service reforms. Despite potential challenges, these reforms promise a stable and prosperous Pakistan. The government's record of economic mismanagement is a testament to its resilience and reform, despite political rhetoric.

Abdul Mussawer Safi is pursuing his bachelor's in international relations at the National Defense University (NDU), Islamabad. He has a profound interest in the regional dynamics of South Asia. Mussawer has also worked with refutable think tanks such as the Institute of Policy Studies (IPS), Islamabad Pak Afghan Youth Forum (PAYF), and South Asia Time (SAT). He tweets at @MussawerSafi and can be reached at mussawersafi1999@gmail.com